WTI jumped overnight after API reported a surprise crude draw and Saudi Arabia signaled that OPEC and allies will continue with production cuts despite pressure from President Trump earlier in the week.

Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes that crude balances are tightening under strict compliance with curbs by OPEC and its partners. We've said since last year that extending the curbs in 2H will be necessary to maintain elevated sentiment for oil. Our takeaways from 4Q earnings suggest heightened efficiency and productivity from U.S. producers in 2019, with lower spending and higher output. A backlog of almost 8,800 uncompleted U.S. wells informs our cautious stance on prices, and we remain concerned about the possibility that trade tensions could slow global economic growth.

If EIA doesn’t confirm the drop, “we risk seeing part of today’s gains unravel, notably as U.S. crude production is expected to be near or at the record high of 12m b/d reported last week," says Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas.

API

• Crude -4.2mm (3mm exp)
• Cushing +2mm
• Gasoline -3.8mm
• Distillates +400k

DOE

• Crude -8.647mm (3mm exp) - biggest since July 2018
• Cushing +1.63mm
• Gasoline -1.906mm (-1.25mm exp)
• Distillates -304k

Confirming API's surprise draw, DOE reported a huge 8.65mm crude inventory decline (the biggest since July 2018).

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The crude stockpiles in Cushing had a big build in last week's data, driven by a temporary outage on a segment of the Keystone Pipeline.

US Crude production topped 12mm b/d - even as the US rig count has begun to roll over...

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WTI prices jumped back to the highs of the day after the big surprise crude draw...

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